Friday, 22 April 2011

Has it ever struck you that in movies the villain is pretty much always ugly? Whether you take a James Bond film, a horror movie, or a Disney character, the bad guy is usually rather ‘esthetically challenged’, dotted with rather unsightly, coarse features.

Well, it now appears that these film makers are rather more realistic in their portrayal of the bad guys than you might have guessed. Criminals – as research by professors Naci Mocan from Louisiana State and Erdal Tekin from Georgia State University showed – are often indeed pretty ugly.

Naci and Erdal obtained data on 20,745 people, who were interviewed and rated at various points during their lives (in the period 1994 – 2002). A small army of independent interviewers rated the person’s level of attractiveness (ranging from very unattractive to very attractive). Subsequently, Naci and Erdal statistically compared this indicator of physical attractiveness with the incidence of the respondent having been involved in a crime, such as property damage, burglary, robbery, theft, assault, or drug-related crimes. And even when they corrected these models for all sorts of background characteristics, such as ethnic background, religion, family situation, income, and so on, the answer was pretty clear: criminals are ugly.

The intriguing question is, of course, how come? Although this involves a healthy dose of speculation, we do know quite a lot from prior research about the influence of physical attractiveness on such things as income and schooling, which might shed some light on the issue. For example, we know from prior studies that good-looking children receive more attention at school, are considered more trustworthy, and are judged to have higher academic potential.*

The problem is that many of these prejudices start to act as self-fulfilling prophecies. Ugly children start to do less well at school because of the low expectations placed on them: they have less belief in themselves, less confidence, they receive less personal attention from their tutors, and so on. And, as a consequence, the prophecy comes true; they do achieve less.

Once on the job market, they are then once again confronted with the same prejudice, making things even more challenging. For example, research has shown that, given the same qualifications, physically attractive applicants are considered more suitable for a particular job. They are also recommended to receive higher starting salaries.* Indeed, the handsome subjects in Naci and Erdal’s study also made substantially more money than their esthetically more challenged counterparts. To conclude, handsome children are helped to achieve more, once they reach adulthood they are more likely to be successful in a job interview, and once they are in the job they get paid more.

As a consequence of these effects, on the margin, ugly people are more often tempted – or perhaps pushed – into a life of crime than people who are physically attractive. The ugly ducklings amongst us are often devout of the opportunities that befall the beautiful and, therefore, comparatively are more prone to end up in crime. So next time Donald Duck traps the thugs, or 007 eliminates the villain, we should also allow ourselves to feel a slight sense of grief and sympathy for the ugly crooks, who might have achieved so much more in life had mother nature made them just that little bit more pleasing to our eye.

* How fundamental our human inclination is to look upon handsome people more favorably than on uglier ones is evidenced by research that shows that, interestingly, even babies pay more attention to the good-looking people peering into their pram than to their equally enthusiastic but less handsome aunts and uncles (Samuels & Elwy, 1985).

** One exception to this rule is that physically less attractive women are generally deemed more qualified than their attractive counterparts when the job they are being considered for is a stereotypical masculine job (Heilman & Saruwatari, 1979).

Thursday, 14 April 2011

Do family-friendly work practices – offering flexibility in case of unexpected childcare emergencies, job sharing schemes, subsidy for childcare, entitlement to work from home, switch to part-time work, etc. – enhance the performance of the firm that adopts them?

Quite a bit of research suggests they do: Several studies have provided evidence that firms offering such practices have higher levels of employee retention, organizational citizenship behavior, and work attitudes. However, I also have to admit that I am a bit skeptical of such “evidence from research”… for several reasons:

First, it is often clear that the researchers conducting these studies wanted to find such a positive relationship, and I cannot suppress a suspicion that there might be just as many studies conducted that fail to turn up the same heart-warming evidence but, as a result of this failure, therefore are not published, and hence we never hear about them.

Second – and at least as important – even if we’d accept this evidence as a given, it does not take into account the financial costs of implementing the family-friendly humbug. Sure, higher levels of employee retention, citizenship behavior and so on, are nice things to have, and I am sure they help an organization become better, but they don’t come for free; family-friendly workplace practices are sometimes plain expensive, and it is not clear from the studies conducted whether the (alleged) benefits outweigh these often substantial financial costs. Past research measured the benefits, but did not take into account the costs involved.

New evidence

Fortunately, recently, professors Nick Bloom, Toby Kretschmer, and John van Reenen (from Stanford, the University of Munich, and the London School of Economics) conducted an extensive study examining the effect of family-friendly practices on hard variables such as firm sales per employee and return on capital employed, using a large database of firms from the US, the UK, Germany, and France. What they found was intriguing and surprising, slightly disappointing, but also reassuring – and, yes, all at the same time.

In their initial, relatively simple statistical analysis, they too found a positive relation between how many family-friendly practices a firm employed and its financial performance – that is, companies with a lot of family-friendly practices generally were more profitable than those without them. But then Nick, Toby, and John decided to correct these statistical models for the quality of the firm’s management. They used an extensive survey and interview procedure (using and elaborate so-called double-blind procedure) to determine the quality of each firm’s management. And then they found that those firms that implemented family-friendly practices were already good to start with. It is not that the practices made them any better; well-managed firms adopted them more often than their more poorly managed counterparts.

Happiness for free

Hence, Nick, Toby, and John’s models showed that well-performing firms implemented family-friendly practices, but subsequently those family-friendly practices did not increase their financial performance even further. Don’t be mistaken; this does not mean that the family-friendly practices did not improve these organizations beyond their original starting point; they probably did. It is just that these benefits did not outweigh the costs incurred; at the end of the day, financially it didn’t make any difference whatsoever whether you adopted them or not. To conclude, firms that had implemented a bunch of family-friendly practices fared well as a result of the increased employee retention, citizenship behavior, and improved work attitudes, but the amount of money they had to spent on the practices exactly equaled the financial benefits that resulted from them.

And I would say that that is not so bad. Basically, family-friendly practices come “for free”; sure, they are expensive, but the benefits you experience from them exactly cover those (substantial) costs. Or, as Nick and his colleagues put it: “this rebuts the claim that providing family-friendly workplace practices detracts from profits. Our results show that although providing family friendly workplace practices may not increase profits, they at least pay for themselves”.

And in a way I like that even better than when firms had been implementing them just because they increased financial performance. Now, it shows that firms do not adopt them out of selfish reasons, but because good managers understand that it does not cost them any money (although it doesn’t make them any either). Because when you can basically increase the happiness of your employees without it costing you a single dime, why not do it? Good managers let the world be a nicer place, not because they benefit from it themselves, but just because they can.

About this Blog

Freek Vermeulen is an Associate Professor of Strategy and Entrepreneurship at the London Business School. FREEKY BUSINESS probes what really goes on in the world of business, once you get beneath the airbrushed façade. It examines the people that run companies – CEOs, managers, directors – and dissects the temptations, the influences and the sometimes ill-advised liaisons and strategies of corporate life.